Auditors exposed to negligence claims
(Times Online): The big four auditing firms have been left exposed to a surge in negligence claims after the Government refused to limit further the damages they could face. Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers (PwC) lobbied hard for a cap on payouts. Senior figures involved in the discussions said that Lord Mandelson, the Business Secretary, appeared receptive to their concerns but stopped short of changing the law. The decision is a huge blow to the firms — some face lawsuits relating to Bernard Madoff’s $65 billion fraud — which believe there may not be another chance for a change in the law for at least two years. At present, auditors can be held liable for the full amount of losses in the event of a collapse, even if they are found to be only partly to blame.
Category: Business
There is something not right about always pursuing the auditors. Granted they domake mistakes but their liability should be proportionate with that of the other service providers and the directors. The latter always escape negligence in the Cayman Islands because they are usually indemnifies by the company for which they act. This archaic situation has to be remedied. It is wrong that the very persons controlling companies escape liability when law suits can be launched against third parties. In most parts of the modern day world such indemnities are barred by law. Persons acting in these positions and frequently acting for over a hundred companies need to be brought into line and for Cayman must change its Companies Law, some of which is based on the English act of 1862.